bharatiya mahila bank- a move to empower women in india

Bharatiya Mahila Bank A Move to Empower Women in India? Case study Reference no 314‐004‐1 This case was written by Rajan Shah, Amity Research Centers Headquarters, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2013, Amity Research Centers Headquarters, Bangalore. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

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Bharatiya Mahila Bank: A Move to Empower Women in India?

Author: Mr. Rajan Shah


Abstract: Post‐independence, India recognised women as a key force in the economy. For betterment of women, India pursued various plans and policies. Government also enacted various laws such as ‘The Dowry Prohibition Act’, ‘The Indecent Representation of Women (Prohibition) Act’, and ‘The Commission of Sati (Prevention) Act’. In a major move, the Government of India (GoI) established ‘The National Commission for Women’ in 1990 and implemented a 10‐year policy known as the ‘National Policy for the Empowerment of Women’ in 2001. These policy initiatives were aimed to improve female literacy rate, work participation rate in organised and public sector, and gross enrolment ratio of girls in schools. In 2010, the government implemented ‘The National Mission for Empowerment of Women’ to initiate numerous programmes. In 2013, the GoI floated an idea of establishing Bharatiya Mahila Bank (BMB), India’s first all women bank headquartered at New Delhi. BMB was aimed at women, women‐run businesses, and aiding women SHGs in order to empower them economically. Experts believed that such move would ensure financial inclusion and empowerment of women and improve their well‐being. But, critics raised their concerns regarding the same, following the closure of nine such banks in the US. In such a scenario, it remained to be seen how BMB would sustain in the long run. Pedagogical Objectives The case study helps to understand and analyse: Women empowerment initiatives in India Rationale behind the creation of Bharatiya Mahila Bank Future prospects.

Case Study “The first step to ensure the dignity of women is to give them equal rights to make India a developed and modern country. We will have to make changes in our families, society and government. If we are able to give equal opportunities to women and create a better atmosphere, 50 per cent of the population will increase the gross domestic product.”1

– Narendra Modi, Chief Minister, Gujarat, India

esiding in Rata Khera village of Jaipur district, Rajasthan, Bhanumati Devi (Bhanumati)2, had never visited a bank in her life. She always relied on her husband for any bank related work.

But, one day when she was roaming in the market to purchase some household stuff, she found that many women from her neighbourhood had gathered in a bank to open an account. Bhanumati too

1 “Equal Rights to Women Key to Developed & Modern India”, http://www.business‐standard.com/article/current‐affairs/equal‐rights‐to‐women‐key‐to‐developed‐modern‐india‐113040900014_1.html, April 9th 2013 2 Hypothetical character.

“© 2013, Amity Research Centers HQ, Bangalore. All rights reserved.”

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joined them. But, after visiting the bank, she observed that women were managing various banking activities. Bhanumati had visited Bharatiya Mahila Bank, India’s first dedicated bank for women.3 This initiative was a part of Government of India’s (GoI) efforts towards strengthening women empowerment in the country. Jayati Ghosh, a professor of Economics at New Delhi's Jawaharlal Nehru University said, “The government wants to construct a building somewhere and say ‘Look women, you have your own bank!’”4 Whether such initiative would boost women empowerment in India or not remained to be seen.

Women Empowerment: Indian Perspective India, the second fastest growing economy in the world after China5, had witnessed paradigm shift in its global economic repute. According to 2011 census, India’s population was 1.21 billion in proportion to its 3.3 million sq. km area.6 Compared to any other nation in the world, India had witnessed higher population growth rate. In the total population of India, 623.7 million were males and 586.5 million were women.7 The considerable number of women in the overall population had fuelled various women‐oriented developments in the country. Traditionally, the word empowerment had been used in different context in different disciplines such as education, social work, and psychology. According to United Nations, the term women empowerment had five components like self worth of women, right for choice making, right for getting various opportunities and resources, and becoming a part of social change.8 The International Centre for Research on Women9 (ICRW) noted that, “A woman is economically empowered when she has both the ability to succeed and advance economically and the power to make and act on economic decisions.”10 Further it elaborated that “To succeed and advance economically, women need the skills and resources to compete in markets, as well as fair and equal access to economic institutions. To have the power and agency to benefit from economic activities, women need to have the ability to make and act on decisions and control resources and profits”11 (Annexure I). Post‐independence, recognising the importance of women in the country, India devised various plans for women development. For instance, GoI in its Fifth Five Year Plan (1974‐78) focused on addressing women related issues.12 India passed The Dowry Prohibition Act in 1961 which prohibited payment of dowry from the bride’s side at the time of marriage. In addition; India also enacted various laws for the betterment of women in the country. For instance, in 1986, The Indecent Representation of Women (Prohibition) Act came into effect which put a ban on discourteous presentation of women via any publications, wirings, paintings, figures or advertisements.13 In 1987,

3 “India’s First Woman’s Bank to be Launched on November 17”, http://www.dnaindia.com/money/report‐india‐s‐first‐women‐s‐bank‐to‐be‐launched‐on‐november‐17‐1912528, November 1

st 2013 4 Gopalnkrishnan Mansi, “A Bank to Empower Women?”, http://www.dw.de/a‐bank‐to‐empower‐women/a‐17084227, September 12th 2013 5 “India still second fastest growing economy: Chidambaram”, http://www.thehindu.com/business/Economy/india‐still‐second‐fastest‐growing‐economy‐chidambaram/article4959820.ece, July 27th 2013 6 “India at a Glance”, http://indiainbusiness.nic.in/know‐india/india‐at‐a‐glance.htm 7 ibid. 8 “Guidelines on Women Empowerment”, http://www.un.org/popin/unfpa/taskforce/guide/iatfwemp.gdl.html 9 A global research institute based in the US, having key focus on women empowerment, gender issues, and poverty alleviation in the developing countries. 10 Marie Golla Anne, et al., “Understanding and Measuring Women’s Economic Empowerment”, http://www.icrw.org/files/publications/Understanding‐measuring‐womens‐economic‐empowerment.pdf, 2011 11 ibid. 12 “National Policy for Empowerment of Women”, http://www.wcd.nic.in/empwomen.htm, 2001 13 “Centre for Social Justice”, http://www.centreforsocialjustice.net/national_law.html

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The Commission of Sati14 (Prevention) Act was formed.15 Apart form various acts, taking a big leap ahead for the women development, in 1985, India created a dedicated department named ‘The Department of Woman and Child Development’ for the overall development of women and children.16 In a major development towards women empowerment, in 1990, India formed ‘The National Commission for Women’ by a special act of parliament to protect rights of women.17 In 2001, the ‘National Policy for the Empowerment of Women’ came into effect with a key focus on women’s advancement, development and empowerment. This policy covered key areas related to economic and social empowerment of women. Economic empowerment approach focused on poverty eradication, micro credit, women and economy, globalisation, women and agriculture, women and industry and provision of support services to women. At the same time, social empowerment approach focused on ensuring provision of education, health, nutrition, drinking water and sanitation, housing and shelter to women. It also aimed at increasing participation of women in the environment related policies and programmes. According to policy makers, with such policy initiative, the GoI emphasised that all central and state level ministries must develop a time bound action plan to translate the policy into solid actions. Key expectation after implementation of this policy was to achieve measurable goals by 2010. In addition, it also stressed on identification of resources and responsibilities of each stakeholder for implementation.18 To identify effectiveness of various women empowerment initiatives in India, in April 2006, the Planning Commission of India19 formed a working group.20 This working group was assigned a task to review, analyse and evaluate various women empowerment initiatives undertaken in India. The Working Group submitted its report and advised GoI to adopt a philosophy of ‘Inclusive and integrated economic, social, and political empowerment with gender justice’ during the Eleventh Five Year Plan (2007‐2012) in India21 (Exhibit I). Meanwhile, on March 8th2010, the GoI launched ‘The National Mission for Empowerment of Women’ (NMEW) on the International Women’s Day.22 The key motive behind NMEW was to strengthen various processes for the development of women in India. The key domain areas under NMEW were poverty alleviation and economic empowerment of women, social empowerment and education, health & nutrition, focusing on gender rights, enforcing laws for gender based violence, empowerment of vulnerable and marginalised groups and women in difficult circumstances.23 Under this initiative, the GoI adopted a convergence model known as ‘The Poorna Shakti Kendra’ (PSK). PSK was established at every village and served as a first point of contact for women with a motto of ‘Hum Sunenge Naari Ki Baat’24.25 PSK was equipped to offer information related to government schemes, services, programmes purely dedicated for women, maintaining database of targeted population, creating awareness on legal rights of women, providing training and capacity building and coordinating various services provided by the various government departments in India.26 Krishna Tirath, Minister of State for Women and Child Development, GoI, said, “The process to start

14 Sati is the act of burning the woman on her husband’s funeral pyre. 15 “Centre for Social Justice”, op.cit. 16 “About Us”, http://wcd.nic.in/ 17 “National Policy for Empowerment of Women”, op.cit 18 ibid. 19 It was established in 1950 by the Government of India to formulate blueprint for economic development. 20 “Report of the Working Group on Empowerment of Women”, http://wcd.nic.in/WomanDevelopment/wgfinalre port.pdf 21 ibid. 22 “About the Mission”, http://www.nmew.gov.in/index.php?lang=1 23 ibid. 24 Which means ‘We shall listen to the Women’, in Hindi. 25 “Convergence Model”, http://www.nmew.gov.in/index1.php?lang=1&level=0&linkid=63&lid=28&ltypeid=2&domid=1 26 ibid.

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the mission has begun. The mission will provide a single‐window to women to allow them use the government's development services”27 (Annexure II).

Exhibit I Women Development – Key Statistics

Development Indicators Women Men Total Women Men Total

Population (in Million in 1971 & 2001) 264.1 284.0 548.1 495.7 531.2 1027.1

Decennial Growth* (1971 & 2001) 24.9 24.4 24.6 21.7 20.9 21.34

Sex Ratio (1971 & 2001) 930 ‐ ‐ 933 ‐ ‐

Expectation of Life at Birth (1971 & 2001‐06)

50.2 50.5 50.9 66.91 63.87 ‐

Mean Age at Marriage (1971 & 1991) 17.2 22.4 ‐ 19.3 23.9 ‐

Death Rate (1970 & 2008) 15.6 15.8 15.7 6.8 8.0 7.4

Literacy Rates (1971 & 2001) 7.9 24.9 16.7 54.28 75.96 65.38

Gross Enrolment Ratio (1990‐91 & 2006‐07) (%)

Class I‐V 85.5 113.9 100.1 107.8 114.4 111.2

Classes VI‐VIII 47.8 76.6 62.1 69.5 77.4 73.6

Drop‐out Rate (1990‐91 & 2006‐07) (%)

Class I‐V 46 40.1 42.6 26.6 24.4 25.4

Classes VI‐VIII ‐ ‐ ‐ 45.3 46.6 46

Work Participation Rate (1971 & 2001) (%) 14.2 52.8 34.3 25.68 51.93 39.26

Organised Sector (No. in lakhs in 1971 & 2006)

19.3 155.6 174.9 51.21 218.72 269.93

Public Sector (No. in lakhs in 1971 & 2006) 8.6 98.7 107.3 30.03 151.85 181.88*recurring every ten years

Source: “Statistics on Women in India 2010”, http://nipccd.nic.in/reports/ehndbk10.pdf, 2010

Highlighting the rationale for such initiative, Pratibha Patil, the then Honourable President of India, said, “Since independence, India had made significant strides in empowering women by addressing social discrimination faced by them, providing them access to resources and spreading awareness among them about their rights. The prosperity and growth of India required that women, half its population, were actively drawn into the planning and development process. It is only when we spread education and skill development among women that they can be agents of economic and social growth. We need a new social reform movement, for gender equality and empowerment of our women – a movement that changes society’s attitude towards women.”28 In December 2012, a ‘Charter of Collaboration’ was singed by UNESCO29 New Delhi with NMEW under the Ministry of Women and Child Development for undertaking various pilot projects in the area of socio‐economic empowerment of women.30 In due course, the GoI under its Twelfth Five

27 “National Mission for Empowerment of Women in Offing”, http://www.business‐standard.com/article/economy‐policy/national‐mission‐for‐empowerment‐of‐women‐in‐offing‐109121500167_1.html, December 15th 2009 28 “National Mission for Empowerment of Women Set in Motion”, http://www.csopartners.org.in/news_link.php?id=77, April 15th 2010 29 It stands for United Nations Educational, Scientific, and Cultural Organisation. 30 “UNESCO New Delhi and the Indian National Mission for Empowerment of Women Sign a Charter of Collaboration”, http://www.unesco.org/new/en/newdelhi/about‐this‐office/single‐view/news/unesco_new_delhi_and_the_indian_national_mission_for_empowerment_of_women_sign_a_charter_of_collaboration‐1/#.UoRjR‐Lb‐ZQ, December 3rd 2012

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Year Plan (2012‐17) allocated nearly `1.8 billion on various on‐going and newly proposed schemes and programmes for women empowerment in India.31 In a major boost towards women empowerment initiatives in India, on February 28th 2013, P. Chidambaram (Chidambaram), Finance Minister, GoI at the time of presenting the annual budget for 2013‐14, floated an idea of establishing a bank exclusively for women.32 The proposed women only bank was created with an investment of `10 billion and focused on women and women‐run businesses.33Chidambaram emphasised that, “There is no bank that exclusively serves women. Can we have a bank that lends mostly to women and women‐run businesses, that supports women SHGs and women's livelihood, that employs predominantly women, and that addresses gender related aspects of empowerment and financial inclusion? I think we can. I therefore propose to set up India's first women's bank as a public sector bank.”34

Bharatiya Mahila Bank: For Women, By Women Bharatiya Mahila Bank (BMB), India’s first all women bank was headquartered at New Delhi and was scheduled to commence its official operations from November 2013 with six branches. An anonymous official who was close to such development said, “It has been decided that the bank will be called the Bhartiya Mahila Bank as it will have connect with rural India, which was the main idea behind setting up a women's bank. It is a commercial bank, which will follow the guidelines stipulated by the Reserve Bank of India.”35 In March 2013, Chidambaram formed a committee of bankers and experts.36 M.B.N. Rao, former Chairman of Canara Bank was appointed as a head of the committee. Other members included M. D. Mallya37, Jayshree Vyas38, Arundhati Bhattacharya39 and K. Ramakrishnan.40 On this development, Chidambaram said, “The committee has been asked to submit the blueprint for women bank by April 30th 2013.”41 In June 2013, the Finance Ministry approached the Reserve Bank of India (RBI) for its clearance to establish BMB. Rajiv Takru, Financial Services Secretary, Ministry of Finance, GoI,said, “The committee set up to prepare the blueprint for all‐women bank has submitted its report to the Finance Minister. We have sought in‐principle approval from RBI for all women bank.”42 He further added that, “Initially we should start with at least one branch in each major region of this country, South, West, East, Centre, North and the North‐east. So that will mean immediately we should start with six branches”43 (Exhibit II). RBI gave its nod for the establishment of BMB in late June 2013.44

31 “Central Scheme for Women Empowerment”, http://newindianexpress.com/nation/Central‐scheme‐for‐womens‐empowerment/2013/04/13/article1542706.ece, April 13

th 2013 32 “Budget 2013‐14”, http://indiabudget.nic.in/ub2013‐14/bs/bs.pdf, February 28

th 2013

33 ibid. 34 Chhabria Vishal, “Government Plans India’s First Women’s Bank”, http://www.business‐standard.com/article/budget/government‐plans‐india‐s‐first‐women‐s‐bank‐113022800497_1.html, February 28th 2013 35 Tiwari Dheeraj, “Bharatiya Mahila Bank to Start Services With Six Branches From November 1”, http://articles.economictimes.indiatimes.com/2013‐07‐05/news/40392116_1_all‐women‐bank‐mbn‐rao‐commercial‐bank, July 5th 2013 36 “Panel Set up to Prepare Blueprint for All‐Women Bank”, http://www.thehindu.com/business/Industry/panel‐set‐up‐to‐prepare‐blueprint‐for‐allwomen‐bank/article4488320.ece, March 8th 2013 37 Former CMD of Bank of Baroda. 38 Managing Director Self‐Employed Women’s Association (SEWA). 39 MD & CEO of SBI Caps. 40 Chief Executive of Indian Banks’ Association. 41 “Panel Set up to Prepare Blueprint for All‐Women Bank”, op.cit. 42 “Finance Ministry Seek RBI Approval for All‐Women Bank”, http://www.thehindu.com/business/Economy/finance‐ministry‐seeks‐rbi‐approval‐for‐allwomen‐bank/article4774994.ece, June 2nd 2013 43 ibid. 44 “Government to Set up 25 Branches of Bharatiya Mahila Bank”, http://www.timespro.com/admissions1/item/133‐government‐to‐setup‐25‐branches‐of‐bharatiya‐mahila‐bank

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Exhibit II Bharatiya Mahila Bank – Key Aspects

Key objective – providing banking needs to women and promoting economic empowerment

Corporate office (including treasury department) will be based at New Delhi

BMB to be headed by Usha Ananthasubramanian, Executive Director, Punjab National Bank

Initial capital `10 billion provided by the government. Hence, 100% owned by Government of India

Dedicated for women and women‐run businesses

Providing financial support to women Self‐Help Groups (SHGs)

Bank projected to have 39 branches and 127 cash machines and serve more than 33,000 customers at the end of the first year

Planned to become profitability by opening100 branches in the fist five years of its operations

Operational Model: → Hosting model: First Indian bank to go for this model for tech infra → Costs: Besides managing IT operations, tech partner to bear the costs for

hardware and software → Payment: Tech partner to be paid on a per‐branch‐per‐month basis → Asset transfer: After end of the contract tenure, all the assets would be

transferred to the bank at a pre‐determined price → Benefits: The model would help the bank avoid making upfront investment in

technology; would also hasten the expansion process

Not allowed to offer any concessional loans and must comply with RBI guidelines. Compiled by the author from various published sources

In July 2013, the Finance Ministry had asked other Public Sector Banks (PSBs) operating in India to provide 125 probationary officers to run BMB on deputation basis.45 Meanwhile, in August 2013, the GoI sought approval of the parliament in allocating `10 billion for BMB. Namo Narain Meena, Minister of State for Finance, GoI, mentioned, “It is proposed to solicit the approval of the Cabinet to include the allocation of Rs 1,000 crore to the Women's Bank in the first Supplementary to be approved in the current Monsoon Session of Parliament.”46 In a major development, on August 8th 2013, the Parliament approved the establishment of BMB.47 An anonymous official close to this development mentioned, “The Bharatiya Mahila Bank proposes to complete the first six branches at Mumbai, Delhi, Kolkata, Chennai, Indore and Guwahati by October 15 and take the total to 25 by March 31, 2014”48 (Exhibit III). BMB had adopted advance approach in its banking operations. For instance, BMB adopted technology infrastructure model on per‐usage payment system. This had made BMB as India’s first bank to use such model. According to this model, various service providers would own the hardware and software of the bank and payment will be made per‐branch‐per‐month basis. Such model would save the initial investment cost and make the process faster. Explaining the model, an anonymous

45 “Green Signal to Women Bank”, http://www.smartinvestor.in/market/Econnews‐192123‐Econnewsdet‐Green_signal_to_women_bank.htm, August 9th 2013 46 “Govt. to Seek parliament Nod for Rs. 1000 cr for Mahila Bank”, http://www.business‐standard.com/article/finance/govt‐to‐seek‐parliament‐nod‐for‐rs‐1‐000‐cr‐for‐mahila‐bank‐113080600839_1.html, August 6

th 2013 47 “Good News: India’s First Women Bank Gets Govt Nod, to Start Ops in November”, http://www.firstpost.com/business/good‐news‐indias‐first‐all‐women‐bank‐gets‐govt‐nod‐to‐start‐ops‐in‐november‐1022189.html, August 9th 2013 48 “All Women Bank to Have 235 Branches by Fiscal‐end”, http://www.business‐standard.com/article/economy‐policy/all‐women‐bank‐to‐have‐25‐branches‐by‐fiscal‐end‐113081800250_1.html, August 18th 2013

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officer said, “Since the capital expenditure will be put in place by the service provider, the bank will not need to have a big IT set‐up. We won’t own it. We will go for a critical access. The project is set up by the vendor on an ownership basis. Normally, there is a contract for a certain period.”49 But, for a new bank, forecasting transaction volumes and determining services for customers were major challenges. Highlighting the pros and cons of such model, Milan Sheth, Partner, Business Advisory Services, Ernst & Young, mentioned, “Several overseas banks have tried to build this model but they have found it very difficult to forecast volumes. The fact that banks would not have to make huge up‐front investments and would be able to start operations at a much faster pace are definite advantages of this model.”50

Exhibit III BMB ‐Projected Operations

Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Number of Branches* 39 134 256 387 517 648 778

Number of ATMs 127 432 715 1,067 1,392 1,740 2,088

Number of users in CBS 200 900 1,626 2,379 3,139 3,931 4,724

Number of customer accounts

33,299 524,914 1,214,427 2,076,583 3,129,012 4,255,267 5,532,912

Number of financial transactions per day

3,330 78,737 242,885 519,146 938,704 1,702,107 2,766,456

*Includes mobile and satellite branches too

Source: Vrishti Beniwal, “Women’s Bank to Get 125 Officers from PSBs”, http://www.business‐standard.com/article/finance/women‐s‐bank‐to‐get‐125‐officers‐from‐psbs‐113072500727_1.html, July 25th

2013

With such model, BMB was scheduled to commence its operations on the birth anniversary of late Indira Gandhi on 19th November 2013.51On this, Chidambaram said, “This bank will be a reality by the end of October and I want to cross an invite to Ms Sushma Swaraj and Mr L K Advani (senior BJP leaders) and all others for inauguration in November.”52 Experts believed that this initiative would make women empowerment strong in India. On November 19th 2013, Manmohan Singh, Prime Minister of India inaugurated the first‐branch of BMB in Mumbai.53 On this occasion, Sonia Gandhi, Chairperson, UPA54, said, “Employees should be kind and supportive to young girls, show extra compassion for the poor and under‐privileged who are among those that banking sector has left untouched.”55

49 “Mahila Bank to Have Pay‐Per‐Use IT Infra Model”, http://www.business‐standard.com/article/finance/mahila‐bank‐to‐have‐pay‐per‐use‐it‐infra‐model‐113091700842_1.html, September 18th 2013 50 ibid. 51 Nair Remya, “Women’s bank Likely to Begin with Operations on 19 November”, http://www.livemint.com/Industry/lBKnEoQt5Z1d0k4gsUMfgP/Womens‐bank‐likely‐to‐begin‐operations‐on‐19‐November.html, September 11th 2013 52 “Budget 2013: India’s First Women Bank by November”, http://www.rediff.com/business/slide‐show/slide‐show‐1‐budget‐womens‐psu‐bank/20130228.htm, February 28th 2013 53 “PM Manmohan Singh Inaugurates Bharatiya Mahila Bank, Sonia Gandhi Attends Function”, http://economictimes.indiatimes.com/news/news‐by‐industry/banking/finance/banking/pm‐manmohan‐singh‐inaugurates‐bharatiya‐mahila‐bank‐sonia‐gandhi‐attends‐function/articleshow/26053310.cms, November 20th 2013 54 United Progressive Alliance formed in 2004 is a coalition of political parties in India, led by the Indian National Congress. 55 “PM Manmohan Singh Inaugurates Bharatiya Mahila Bank, Sonia Gandhi Attends Function”, op.cit.

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Banking on Women: The Way Ahead On November 12th 2013, Usha Ananthasubramanian (Usha) took charge as the Chairperson and Managing Director (CMD) of BMB.56 Commenting on the role of BMB, Usha said, “The status and economic empowerment of women in our country is very low as compared with some other countries. Improving the status and the livelihood of women is the single most important way in improving the standard of living. Many women do not control cash at home even in metropolitan cities like Delhi, Mumbai etc. The bank will help in supporting women by giving advice and in a sustainable way. When women’s income increases, it will improve significantly in the society as well”57 (Exhibit IV).

Exhibit IV

Leader’s Approach – Usha Ananthasubramanian

Q. Is there a need to set up a separate bank for women? Usha ‐ The un‐served women’s population is huge. According to an international management

consultant firm, India is placed 115, out of the 128 countries in the women’s empowerment scale. There are women who have sharp business sense, but do not get opportunities. They have never been encouraged or had the right kind of money to invest. There are a lot of captive customers available. As a concept it is really good because it will touch the lives of so many women.

Q. What is unique about this bank? Usha ‐ This is the first public sector bank which has been created. All other public sector banks have

been founded by an individual and then nationalized. There has been no bank created in the public sector space, they have all been acquired by an Act of Parliament. This is a unique bank which has been scripted in the public sector space and it comes with a Rs.1,000 crore capital. A core management team of seven members has been formed by the government of India, headed by me, to set up the bank advised by SBI Capital Markets. The application was made in June and we got the final licence by 25 September. The Rs.1,000 crore capital has already flown in and the systems are in place.

Q. What is the plan in terms of branch expansion? Usha ‐ We aim to have 25 branches in the first year by March 2014 and 75 branches each year after

that. Then, there is a seven‐year plan for the ramp‐up. We needed people of experience because banking is a very serious business. We have taken people from all public sector banks. We have also recruited 30 people on board out of the 100 total people on board currently.

Q. How will your bank be different from other public sector banks? Usha ‐ We must appreciate the fact that women are underutilized as an economic asset and so

there is a lot of untapped potential. We need to engage women economically. This bank’s approach will be to inspire people with entrepreneurial skills. We will tie up with NGOs. We will also locally mobilize women to train them in vocations like toy‐making or driving tractors or mobile repairs. We will try to reach deeper rural pockets.

Q. Will you lend to and receive deposits only from women?

56 “Usha Ananthasubramanian Appointed CMD of Bhartiya Mahila Bank”, http://businesstoday.intoday.in/story/usha‐ananthasubramanian‐cmd‐of‐bharatiya‐mahila‐bank/1/200519.html, November 12th 2013 57 “Goal of Women Bank is to Support Women in the Country: Usha Ananthasubramanian”, http://www.apnnews.com/2013/10/12/goal‐of‐womens‐bank‐is‐to‐support‐women‐in‐the‐country‐usha‐ananthasubramanian/, October 12th 2013

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Usha ‐ No. I want to make it clear that it is predominantly for women. For resources, all are

welcome. Loans also will be given predominantly to women, but we never say it is not to others and we are targeting Rs.60 out of every Rs.100 to be lent to women. Also, as customers, we will not consider only women as an individual, but we can have a company with a woman CEO as a borrower. Similarly, a company where 40% employees are women or 20% directors are women could be considered by us. We can tie up with a nursing college for women or a teachers training college for women. Besides, we will also lend to firms that are making certain products exclusively for women.

Q. That’s about loans. What about deposits? Usha ‐ Deposits will flow from everyone, but lending will be predominantly for women. Men

building women‐centric projects will also be preferred. For instance, garment factories’ employees are predominantly women.

Q. Will you give subsidized credit to women? Usha ‐ There could be some concessions that are being thought of. We need to encourage

women... People are not worried about interest rates, but about timely credit. The borrowers are ready to pay half a per cent more as long as you are able to meet the timeline. The moneylender is still part of the ecosystem because he can give you money even at midnight. We are looking to give 4.5% on savings accounts up to Rs.1 lakh and 5% for above Rs.1 lakh to encourage more savings and tap CASA (current and savings account deposits). No subsidies are being discussed, but it will all depend on the volumes.

Q. In a country where half of the population is still unbanked, how good is an idea to focus on

one section of the society? Usha ‐ We are not excluding anyone for deposits. Even for advances, men are not excluded. In the

Indian context, we have a problem where women do not have collaterals, the properties are not in their name, and so we need to focus on taking women on the credit guarantee platform which asks for no collateral for less than Rs.1 crore. Anyone who starts a small enterprise, doesn’t need Rs.10 or Rs.20 crore. We are focusing on empowerment with small amounts which helps them to grow gradually.

Source:

1. Sahu Prasanta, “At Work: Women’s Only Banker”, http://blogs.wsj.com/indiarealtime/2013/09/03/womens‐only‐banker/, September 3rd 2013

2. Rebello Joel, “Women’s Bank Will Inspire People with Entrepreneurial Skills, Says CMD”, http://www.livemint.com/Industry/ZjeTmEJjc8Jj78eqyoTJoI/Mahila‐Bank‐will‐inspire‐people‐with‐entrepreneurial‐skills.html, November 19th 2013

Experts too believed that there was a positive linkage between financial empowerment of women and well‐being of their families in particular and the economy in general. But, in order to achieve such goal, there were certain key success factors to be leveraged by BMB. These included vision of BMB, identification of right leaders and clients, use of local talents, customer differentiation, and maintaining quality in product or services offerings.58 Shinjini Kumar (Shinjini), Director at PricewaterhouseCoopers, said, “Creating an institution with critical mass of talented women might be a good starting point to tap local talent. It will also increase the visibility of women in the decision‐making space.”59 Supporting Shinjini, S.L. Rao60, said, “Women have special issues when it

58 “Is the Mahila Bank a Good Idea?”, http://www.business‐standard.com/article/opinion/is‐the‐mahila‐bank‐a‐good‐idea‐113040800530_1.html, April 8th 2013 59 ibid. 60 He is a sociologist based at Bangalore and former Director General of the National Council for Applied Economic Research.

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comes to banking. They are relatively uneducated and may not know how to open a bank account. To that extent, staffing a bank predominantly with women will help female customers to walk into a bank without too much hesitation. However, its not a good idea to restrict the customer base on the basis of gender.”61 With women empowerment as a key reason for its existence, analysts felt that Microfinance Institutions would face direct competition from BMB which might adversely impact their businesses. An anonymous Chief Executive Officer of a Hyderabad‐based Microfinance company said, “It seems the central government has taken a cue from the state government. The budget has not offered us any relaxations on service tax and remained silent on the progress of the central act for microfinance institutions. Instead, we will now have to compete with a new bank that will be financially stronger than us. It may threaten our existence.”62 Experts argued that BMB must work on sound commercial principles. Also, BMB must not lend to the clients who were already rejected by the other banks. At the same time, banking pundits opined that BMB must also draw lessons from the US. During 1975 to 1980, The US had witnessed closure of nine such banks.63 These banks were closed down due to continuous decline in profits. In such a scenario, it remained to be seen how BMB would sustain in the long run.

Annexure I

Women Empowerment – Framework

Source: Marie GollaAnne, etal., “Understanding and Measuring Women’s Economic Empowerment”,

http://www.icrw.org/files/publications/Understanding‐measuring‐womens‐economic‐empowerment.pdf, 2011

61“Women’s bank Likely to Begin with Operations on 19 November”, op.cit. 62“Government Plans India’s First Women’s Bank”, op.cit. 63“Bhartiya Mahila Bank a Welcome Step, Should Work on Sound Commercial Principles”, http://articles.economictimes.indiatimes.com/2013‐07‐06/news/40407694_1_bank‐lending‐general‐bank‐new‐private‐bank‐licences, June 6th 2013

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Annexure II Schemes & Programmes Under NMEW

Poverty Alleviation and Economic Empowerment of Women

Assistance to States for Feed and Fodder Development Schemes of Department of Animal Husbandry Dairying Fisheries Scheme on Development of Inland Fisheries and Aquaculture Scheme on Development of Marine Fisheries, Infrastructure and Post harvest Operations Scheme on Fisheries Training and Extension Assistance to Cooperatives National Bamboo Mission Central Poultry Development Organisation Development of Commercial Horticulture through Production and Post‐Harvest Management Promotion and Strengthening of Agricultural Mechanization through Training, Testing & Demonstration Gramin Bhandaran Yojna Capacity Building to enhance Competitiveness of Indian Agriculture and Registration of Organic Products Technology Development and Transfer for Promotion of Horticulture Marketing Assistance Scheme Scheme of Support to Voluntary Agencies for Adult Education and Skill Development Scheme of Fund for Regeneration of Traditional Industries (SFURTI) Performance & Credit Rating Scheme for Small Industries Entrepreneurship Development Institutions (EDIs) Scheme National Award Scheme/ Guidelines [Launched by Ministry of Micro, Small & Medium Enterprise (MSME)] Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation of the Small Scale Industrie Management Training Programmes Scheme For Market Development Assistance For MSME Exporters Credit Guarantee Cover Fund Scheme for Small Industries Rajiv Gandhi Udyami Mitra Yojana (RGUMY) Raw Material Assistance Scheme Bamboo Cultivation Organic Farming Swarnajayanti Gram Swarozgar Yojana (SGSY) Mushroom Farming Scheme of Financial Assistance for Preparing Young Professional in Rural Areas Mahatma Gandhi National Rural Employment Guarantee Scheme Pottery Technology Technopreneur Promotion Programme Consultancy Promotion Programme Technology Development & Utilization Programme for Women Industrial R&D Promotion Programme (IRDPP) National Backward Classes Finance and Development Corporation National Scheduled Castes Finance & Development Corporation Marketing and Export Promotion Scheme Grant in Aid Scheme ‐ Export Diversified Handloom Development Scheme (DHDS) Grant in Aid Scheme – Ambedkar Hastshilp Vikas Yojna Jute Manufactures Development Council Schemes Scheme for Integrated Textile Parks Grant in Aid Scheme ‐ HRD Scheme Technology Upgradation Fund Scheme

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Technology Upgradation Fund Scheme (Handloom Sector) Dairy/Poultry Venture Capital Fund Assistance to Cooperatives Scheme Strengthening Infrastructure for Quality & Clean Milk Production Rajiv Gandhi National Creche Scheme Total Sanitation Campaign (TSC) National Rural Drinking Water Programme Mid Day Meal Kishori Shakti Yogana Targeted Public Distribution System (TPDS) Antyodaya Anna Yojna (AAY) Old and Infirm Persons Annapurna National Iodine Deficiency Disorders Control Programme (NIDDCP) Nutrition Education and Extension Rashtriya Swasthya Bima Yojana(RSBY) Indira Gandhi Matritva Sahyog Yojana (IGMSY) ‐ A Conditional Maternity Benefit Scheme Rajiv Gandhi Scheme for Empowerment of Adolescent Girls (RGSEAG) Sabla SwayamSiddha Scheme for Working Women Hostel Short Stay Home For Women and Girls (SSH) STEP (Support to Training and Employment Programme for Women)

Social Empowerment And Education

Elementary Education Secondary Education Vocationalization of Secondary Education Adult Education Higher and Technical Education

Health & Nutrition

Integrated Child Development Scheme Reproductive & Child Health Programme, Ph.II (RCH II) National Rural Health Mission Janani Suraksha Yojana Indira Gandhi Matritva Sahyog Yojana (IGMSY) Integrated Child Protection Scheme Rajiv Gandhi National Creche Scheme Total Sanitation Campaign (TSC) National Rural Drinking Water Programme Mid Day Meal Sabla Kishori Shakti Yogana Targeted Public Distribution System (TPDS) Antyodaya Anna Yojna (AAY) Old and Infirm Persons Annapurna Food Security Mission National Iodine Deficiency Disorders Control Programme (NIDDCP) Nutrition Education and Extension Rashtriya Swasthya Bima Yojana(RSBY) Sarva Shiksha Abhiyan

Empowerment of Vulnerable and Marginalized Groups and Women in Difficult Circumstances

Schemes of National Scheduled Tribes Finance and development Corporation (NSTFDC) Integrated Child Development Scheme National Rural Health Mission Janani Suraksha Yojana

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Integrated Child Protection Scheme Swadhar ‐ A scheme for Women in Difficult Circumstances Targeted Public Distribution System (TPDS) Antyodaya Anna Yojna (AAY) Ujjawala‐ A Scheme for Prevention of Trafficking and Rescue, Rehabilitation and Reintegration Rashtriya Swasthya Bima Yojana(RSBY) Sarva Shiksha Abhiyan Indira Gandhi Matritva Sahyog Yojana (IGMSY) ‐ A Conditional Maternity Benefit Scheme Rajiv Gandhi Scheme for Empowerment of Adolescent Girls (RGSEAG) Sabla SwayamSiddha Scheme for Working Women Hostel STEP (Support to Training and Employment Programme for Women) Swarnjayanti Gram Swarozgar Yojana Indira Awaas Yojana (IAY) Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) Source: “Schemes & Programmes”, http://www.nmew.gov.in/dommain.php?lang=1&ltypeid=1

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bharatiya mahila bank- a move to empower women in india

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